U.S. equity futures were little changed moving into overnight trading Wednesday after stocks capped the main session sharply higher on hopes for an earnings season boost to markets. Investors look ahead to a flurry of reports due out from big banks like Citigroup and Wells Fargo before the opening bell Thursday.
Futures tied to all three major indexes were mostly flat in after-hours after the Nasdaq Composite gained 2% on its best day since March 18 following a streak of heavy losses in tech. The S&P 500 jumped 1% to end a three-day slide, and the Dow was up 340 points at the closing bell. Meanwhile, Treasury yields pulled back across the curve after the 10-year benchmark hovered above 2.7% throughout the week.
Sentiment on Wall Street recovered Wednesday after inflation data spooked investors to start the week. Traders weighed a flurry of first-quarter earnings from JPMorgan Chase (JPM), Delta Air Lines (DAL), and Bed, Bath & Beyond (BBBY).
Delta rose 6.2% despite another loss in its quarterly results after the airline said it returned to profitability in March following an Omicron hit on business and predicted revenue will reach between 92% and 97% of pre-pandemic levels this quarter. Meanwhile, JPMorgan shares closed down 3.2% to the lowest level since January 2021 after the largest U.S. bank by assets reported a 42% drop in profit from last year on losses tied to higher inflation and Russia’s war in Ukraine. Bed, Bath & Beyond also faltered after it missed sales expectations.
Market-watchers will get a better picture of what’s ahead on Thursday as reports trickle in from more big names including megabanks Wells Fargo (WFC), Goldman Sachs (GS), Morgan Stanley (MS), and Citigroup (C), and drugstore chain Rite Aid (RAD).
The initial batch of reports prefaces a milder quarter for earnings growth than previous periods. However, earnings are expected to be a bright spot for investors who much of this year so far have grappled with sharp market swings tied to worsening geopolitical risk, inflationary pressures, and fears monetary tightening may prompt an economic contraction as the Federal Reserve sets out on its rate-hiking plans.
Analysts have tempered their expectations on first-quarter earnings, lowering bottom-up EPS forecasts in aggregate for the Q1 by 0.7% from $52.21 to $51.83, according to data from FactSet. On the other hand, EPS forecasts for the second quarter are up by 1.6% from $55.16% to $56.07, by 2.4% from $57.82 to $59.23 for the third quarter, by 3.9% from $58.31 to $60.59 for the fourth quarter and by 2.0% from $223.43 to $227.80 for 2022 overall.
Economists at Bank of America in a note out this week also predicted a resilient earnings quarter despite grim macroeconomic headlines throughout the period.
“Leading signals and early reporters suggest a high likelihood of an EPS beat in Q1,” BofA said, adding the financial institution expects a 4% beat or $53.50 vs. a consensus of $51.54. However, the bank warned analyst expectations for record margins in the coming quarters were “too high.”
“History suggests that oil shocks spawn weaker consumption with a three-to-four quarter lag, indicating a 2H slowdown,” the note said.
Source By: Yahoo Finance